Which of the Following Statements Is True of a Brand

question 4

Multiple Choice

Which of the following statements is true of a brand extension strategy?

• A) Brand extension cuts the costs and risks of introducing new products.
• B) It is used by firms that have a weak brand name.
• C) It is a strategy used by start-up firms.
• D) It refers to developing items to fill gaps in the market.
• E) Brand extension refers to creating variations of a product.

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Definitions:

Excess Capacity

A situation in which a company can produce more goods or services than currently demanded, due to underused resources.

Economic Profit

Profit calculated by subtracting both explicit and implicit costs from total revenues, indicating the efficiency beyond the breakeven point.

Capital-Intensive

Describing industries or processes that require a high level of capital investment in machinery and equipment relative to labor.

Labor-Intensive

A process or industry that requires a high input of labor relative to capital in the production of goods or services.